L.A. BIZ: MoviePass to invest in movies before it sells cheap tickets to them

MoviePass arrived at the Sundance Film Festival this week not just as seller of cheap movie tickets but as a buyer of the movies themselves.

The New York-based movie theater subscription service has launched MoviePass Ventures, a wholly owned subsidiary that will co-acquire films with distributors.

Although details are scarce, and no distributor partnerships or film acquisitions have been announced, the move provides more insight into how the company plans to make money.

MoviePass relaunched in August with an all-you-can-watch movie subscription plan for just $10 per month. Subscribers can go to one movie per day, every day, with no blackout dates (excluding Imax and 3-D showings) for one flat monthly rate that’s about a buck more than the cost of one average movie ticket — and a lot less for many moviegoers.

Earlier this month, the company announced it had surpassed 1.5 million subscribers.

Meanwhile, MoviePass, which is majority owned by Helios and Matheson Analytics Inc. (NASDAQ: HMNY), reimburses movie theaters for the full price of those tickets and is operating at a loss as it attempts to convince the industry that its service increases moviegoing.

The company said that it accounts for about 3 percent of domestic ticket sales, but that figure goes up to more than 10 percent of a particular title’s domestic box office when MoviePass promotes the movie to its subscribers. The company said it has boosted its share of domestic box office to 10 percent for such films as “The Post,” “Three Billboards Outside of Ebbing, Missouri,” “Call Me by Your Name” and “The Shape of Water.”

And such increases in the theatrical window pay dividends downstream on platforms such as DVD/Blu-ray, digital, streaming, pay TV, network television, airlines and hotels, and foreign sales.

MoviePass will apply these marketing strategies to the films it co-acquires.

“Given the successes we have demonstrated for our distributor partners in ensuring strong box office in the theatrical window, it’s only natural for us to double down and want to play alongside them — and share in the upside,” said CEO Mitch Lowe in a statement.

“We aren’t here at Sundance to compete with distributors, but rather to put skin in the game alongside them and to bring great films to the big screen across the country for our subscribers,” added Helios and Matheson Analytics CEO Ted Farnsworth.